IEA Bioenergy: ExCo: 2020:01 This publication provides the summary and conclusions for the workshop ‘Developing business models for efficient use of biomass’ held in conjunction with the meeting of the Executive Committee of IEA Bioenergy in Tallinn, Estonia on 22 October 2019. Developing business models for efficient use of biomass Summary and conclusions from the IEA Bioenergy workshop,Tallinn (Estonia), 22 October 2019
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Developing business models for efficient use of biomass · chains, (2) examples of developing biobased business models, and (3) CO 2 capture as part of future biomass business models.
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IEA Bioenergy: ExCo: 2020:01
This publication provides the summary and conclusions for the workshop ‘Developing business models for efficient use of biomass’ held in conjunction with the meeting of the Executive Committee of IEA Bioenergy in Tallinn, Estonia on 22 October 2019.
Developing business models for efficient use of biomassSummary and conclusions from the IEA Bioenergy workshop, Tallinn (Estonia), 22 October 2019
The IEA Bioenergy Technology Collaboration Programme (IEA Bioenergy TCP) is organised under the auspices of the International Energy Agency (IEA) but is functionally and legally autonomous. Views, findings and publications of the IEA Bioenergy TCP do not necessarily represent the views or policies of the IEA Secretariat or its individual member countries.
TABLE OF CONTENTS
EXECUTIVE SUMMARY 2
WORKSHOP 4
Welcome and introduction 4
Maximising added value and efficient use of raw materials
in the bioeconomy and its sectors in Estonia 4
Session 1: Setting up biomass supply chains 5
SWOT of bio-hubs in deploying biobased supply chains 5
The Biomass Exchange – virtual transmission grid in biomass markets 6
Enabling a Regional Bioeconomy: Australian case study
for developing biomass supply chains 7
Session conclusions 8
Session 2: Examples of developing biobased business models 9
Turning wood into high purity lignin and wood sugars to industrialize
innovative biomaterials and bioproducts – status of SWEETWOODS Flagship Project 9
Building a business case with pyrolysis of woody biomass 10
Investing in the biobased economy 11
Setting up biomass supply chains for advanced cellulosic ethanol production 12
Session conclusions 13
Session 3: CO2 capture as part of future biomass business models 14
Outlook on bioenergy combined with carbon capture, utilization and storage (BECCUS) 14
Northern Lights – A European CO2 transport and storage network 15
Developing bioenergy with carbon capture and storage (BECCS) at Drax 16
partnerships, dedicated public funding and private
willingness to invest in CO2 reduction projects.
Developing bioenergy with carbon capture and storage (BECCS) at Drax
Luc Pelkmans, IEA Bioenergy on behalf of Karl Smyth, Drax, UK
Due to unexpected circumstances, Mr. Smyth was not able to come to Estonia. His slides were presented by Luc Pelkmans, Technical Coordinator of IEA Bioenergy.
Between 2013 and 2018 Drax has converted four
units of 645 MW coal power facilities to
biomass. The ambition is to capture the CO2
emissions in these facilities. This way 16 million
tonnes of CO2 per year could be sequestered.
In a recent report of the UK Committee on
Climate Change it was recognized that BECCS
is essential to reach net zero emissions in the UK
by 2050. Of the residual 85 million tonnes of CO2
emissions per year in the UK, 50 million tonnes
would need to be compensated through BECCS.
The four Drax units could have a major role.
Early this year a BECCS pilot was commissioned
at Drax, at one tonne of CO2 capture per day. The
chemical process for CO2 removal is developed
by C-Capture, a spin-off of Leeds University.
The ambition is to have deployment of the first
commercial scale BECCS unit at Drax by mid
2020s, representing 2.5 million tonnes of CO2 per
annum, and have full conversion of the biomass
units to BECCS in the 2030s. Meanwhile
a large-scale CO2 transport and storage
network is developed in the area.
Figure 10: Operation of BECCS at the power station (source: Drax)
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The second part of the presentation was
about policies needed to support negative
emissions in the UK, based on a recent report
of Vivid Economics. The report concluded that
Greenhouse Gas Removal (GGR) is vital to hit
the 2050 Net Zero target, with BECCS and
DACCS (direct air carbon capture and storage)
expected to be the two dominant GGR options
due to their scalability. Significant policy
support will be required to enable GGR rollout
at the scale required. Annual costs of GGRs are
estimated at between £1-2 billion in 2030 and
£6-30 billion in 2050.
Next to direct policies (such as subsidies,
obligations, tax credits), enabling policies
(such as pilot projects, demonstration support,
investment coordination, information provision)
and integrating policies (e.g. in terms of land use)
will also be needed in the short term.
Trading platform for negative CO2 emissions
Marianne Tikkanen, Puro, Finland
Puro is the world’s first marketplace to offer
verified CO2 removal certificates (CORCs). One
CORC represents one tonne of net-negative
CO2 removal. Any net-negative technology can
qualify if it guarantees long term storage (>50
years) and if the CO2 removal can be measured.
CO2 removals must
be proven ex-post
through LCA for the
past 6-12 months.
Distinction is made
between technical
capture of CO2 (e.g.
from exhaust gas or
from air) and natural
photosynthesis
(through biomass and underground microbes).
So far Puro recognizes three end storage options:
carbonated building elements, wooden building
elements and biochar (which hardly decomposes
in a 50-year timeframe). More options will
follow. So far afforestation has not been included,
as the permanence issue has not been solved.
In October 2019, CORC certificates were
traded for on average €22.67, which is a little
below ETS CO2 prices. Buyers come from a
range of industries – IT-digital, travel/logistics,
consultants, agri-food, offset retailers, energy.
Business reasons are diverse, but often include
pressure from customers or competitors. The
extra revenue that CO2 removal certificates bring,
stimulates the net-negative businesses that store
more CO2 than they emit.
Figure 11: operation of the CO2 removal certificates marketplace (source: Puro)
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Session conclusions
Olle Olsson, Stockholm Environment Institute, Sweden, provided a review of the session. Bio-CCS/BECCS is the most market ready negative emission technology today, with many activities around the world, and it is indispensable to reach net zero emissions by mid-century. Certain sectors are particularly suited for carbon capture. Carbon transport and storage is being developed – also serving the fossil sector – where bioenergy can tap into. In review of technologies, policies are needed as are technology development, infrastructure and some business model. Credits for negative CO2 emissions will be needed, which could be provided through taxation of CO2 emissions. Alternatively, voluntary compensation systems could complement policies.
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Panel discussionThe closing panel session was moderated by Jim Spaeth, US Department of Energy. Panel participants were Olle Olsson (SEI), Emil Yde Aasen (Equinor), Karel Lember (Estonian Ministry of Economic Affairs and Communications), Mark Brown (USC) and Gloria Gaupmann (Clariant).
The central items for the panel discussion were:
• challenges and opportunities to expand biomass mobilization in a sustainable way and setting up supply chains;
• main barriers for industry investments in biobased business models and BECCS;
• recommendations to overcome these barriers.
Biomass mobilisation
• Most commercial forestry in developed countries is operating under sustainable forestry management schemes (FSC2, PEFC3), or controlled by forestry law. There is hesitance at the forestry level to go beyond the existing standards. It is better to understand the current gaps and integrate requirements into existing standards, also recognizing that forestry produces a portfolio of products, only part of it being biomass for energy.
2 Forest Stewardship Council
3 Program for the Endorsement of Forest Certification
• Forestry and agriculture have a wealth of experience with multiple feedstocks and owners. Complexity comes in the interface between supply chains and markets they serve, and bio-hubs can be a promising tool to deal with this. It may be best to go for a few commodity products, with well-defined quality criteria. These commodities can be part of trading platforms.
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• Integration throughout the value chain is
a challenge for biobased industries and
requires substantial efforts. Parties need to
understand each other, and communication
is a crucial issue. Policies and programs
(such as the U.S. Biomass Crop Assistance
Program) can facilitate value chain integration.
Business models
• The complexity of biobased systems
must be recognized. To transition away
from fossil resources, massive developments
will be needed in the bioeconomy, with
high investment costs and long project timelines. So, it is critical to ensure strong
business models and supportive investment
conditions.
• Cooperation is needed between the private
sector, public sector and academia. It is
important to create enabling partnerships.
Knowledge and capability in supply chains
connected to technology knowledge helped
developments in Scandinavia.
• First mover risks are high, with
opportunities only coming at later stages,
creating multiple potential valleys of death
in between. Technologies need to go through
a learning curve (which the fossil industry
had in the past century) – the question
is how to speed up this learning curve.
• Risk abatement and risk sharing will
be crucial, e.g. through public funding at
the initial phase (to bring technology to a
certain point) and public investment funds/
loan guarantees at early market introduction.
A positive opportunity is that current interest
rates are low and a lot of venture capital is
looking for good investment opportunities.
• Strong policy support is required, considering
the value proposition provided by biobased
solutions. The value proposition can represent
a step change in industry, making it
worthwhile to take the risk.
• Sustainability needs to be assured and the
focus should be on technologies that have
less concerns in this respect. Sustainability advantages need to be reflected through
market value or market access. Without
that, a cost disadvantage will likely remain
in the long term. A stable long-term policy
framework is crucial.
• There should be a value of carbon created
across industries. This enables a short-term
realisation of low-hanging fruit. Nevertheless,
carbon prices should be at sufficient level to
make a difference. In relation to CCS, some
of the early lower cost opportunities will be
at biomass facilities.
• Real projects move barriers more quickly
than just talking about the theory. This is
particularly the case for CCS, which had a
bumpy ride, but things are now starting to
happen. The opening of the transport and
storage side facilitates developments in
the capture side.
• Communication and engagement with the local community from the earliest
project stages is very important. Shared benefits/ownership can be a powerful way
to deal with local resistance to new facilities.
Recommendations
At the close of the panel discussion, panellists
were asked for their final recommendations.
• Communication and engagement with
the local community is very important. It
is not only about risks and how these are
covered, but also about communicating
opportunities. Local support helps for scaling
up and creating additional investments and
can be particularly relevant for the concept
of bio-hubs.
• We need to encourage the biobased sectors
to take more risk and set up policy and
investment frameworks that improve their chances to be successful.
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• The bioenergy sector should explore and
develop CO2 capture as an option, which
can be a main driver for support to the
bioenergy sector.
• There are several studies on the value of carbon reduction. At a certain threshold
level BECCS will be accelerated, looking
at low hanging fruits. There are several
emission points of CO2 and things can
evolve in parallel.
• The strength of IEA Bioenergy is in bringing
disparate groups and networks together.
Nevertheless, we need to extend to who and how we communicate (broaden
our audience).
Closing remarksLuc Pelkmans, Technical Coordinator of